Intrinsic value of Airgain, Inc. - AIRG

Previous Close

$14.51

  Intrinsic Value

$8.64

stock screener

  Rating & Target

sell

-40%

Previous close

$14.51

 
Intrinsic value

$8.64

 
Up/down potential

-40%

 
Rating

sell

We calculate the intrinsic value of AIRG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  26.80
  24.62
  22.66
  20.89
  19.30
  17.87
  16.59
  15.43
  14.38
  13.45
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
Revenue, $m
  63
  79
  97
  117
  140
  165
  192
  222
  254
  288
  324
  362
  403
  445
  490
  536
  585
  635
  688
  742
  799
  858
  919
  983
  1,049
  1,118
  1,190
  1,264
  1,342
  1,423
Variable operating expenses, $m
  58
  73
  89
  108
  128
  151
  176
  204
  233
  264
  297
  333
  370
  409
  450
  492
  537
  583
  631
  681
  733
  788
  844
  902
  963
  1,027
  1,092
  1,161
  1,232
  1,306
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  58
  73
  89
  108
  128
  151
  176
  204
  233
  264
  297
  333
  370
  409
  450
  492
  537
  583
  631
  681
  733
  788
  844
  902
  963
  1,027
  1,092
  1,161
  1,232
  1,306
Operating income, $m
  5
  6
  8
  10
  11
  13
  16
  18
  21
  23
  27
  30
  33
  37
  40
  44
  48
  52
  56
  61
  66
  70
  75
  81
  86
  92
  98
  104
  110
  117
EBITDA, $m
  6
  7
  9
  11
  13
  15
  18
  21
  24
  27
  30
  34
  38
  42
  46
  50
  55
  59
  64
  69
  75
  80
  86
  92
  98
  104
  111
  118
  125
  133
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
Earnings before tax, $m
  5
  6
  8
  9
  11
  12
  14
  17
  19
  21
  24
  27
  30
  33
  36
  40
  43
  47
  51
  55
  59
  63
  68
  72
  77
  82
  87
  93
  99
  104
Tax expense, $m
  1
  2
  2
  2
  3
  3
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
  28
Net income, $m
  4
  5
  5
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  27
  29
  32
  34
  37
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
  76

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  36
  45
  55
  66
  79
  94
  109
  126
  144
  163
  184
  206
  229
  253
  278
  304
  332
  360
  390
  421
  453
  487
  522
  558
  596
  635
  675
  718
  762
  808
Adjusted assets (=assets-cash), $m
  36
  45
  55
  66
  79
  94
  109
  126
  144
  163
  184
  206
  229
  253
  278
  304
  332
  360
  390
  421
  453
  487
  522
  558
  596
  635
  675
  718
  762
  808
Revenue / Adjusted assets
  1.750
  1.756
  1.764
  1.773
  1.772
  1.755
  1.761
  1.762
  1.764
  1.767
  1.761
  1.757
  1.760
  1.759
  1.763
  1.763
  1.762
  1.764
  1.764
  1.762
  1.764
  1.762
  1.761
  1.762
  1.760
  1.761
  1.763
  1.760
  1.761
  1.761
Average production assets, $m
  5
  7
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  34
  37
  41
  45
  49
  53
  58
  62
  67
  72
  77
  83
  88
  94
  100
  106
  113
  120
Working capital, $m
  2
  2
  3
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  19
  20
  22
  23
  25
  27
  28
  30
  32
  34
  36
  38
Total debt, $m
  4
  6
  10
  13
  17
  21
  26
  31
  37
  43
  49
  56
  63
  70
  78
  86
  95
  104
  113
  122
  132
  143
  153
  164
  176
  188
  201
  214
  227
  241
Total liabilities, $m
  11
  14
  17
  20
  24
  29
  34
  39
  44
  50
  57
  63
  70
  78
  86
  94
  102
  111
  120
  130
  140
  150
  161
  172
  183
  195
  208
  221
  235
  249
Total equity, $m
  25
  31
  38
  46
  55
  65
  75
  87
  100
  113
  127
  142
  158
  175
  192
  211
  230
  249
  270
  291
  314
  337
  361
  386
  412
  439
  467
  497
  527
  559
Total liabilities and equity, $m
  36
  45
  55
  66
  79
  94
  109
  126
  144
  163
  184
  205
  228
  253
  278
  305
  332
  360
  390
  421
  454
  487
  522
  558
  595
  634
  675
  718
  762
  808
Debt-to-equity ratio
  0.150
  0.210
  0.250
  0.280
  0.310
  0.330
  0.350
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
  0.430
Adjusted equity ratio
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692
  0.692

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  5
  5
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  27
  29
  32
  34
  37
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
  76
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
Funds from operations, $m
  4
  6
  7
  8
  9
  11
  13
  15
  17
  19
  21
  24
  26
  29
  32
  35
  38
  41
  45
  48
  52
  56
  60
  64
  68
  73
  77
  82
  87
  92
Change in working capital, $m
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  4
  5
  6
  7
  9
  10
  12
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  40
  43
  47
  51
  54
  58
  62
  66
  71
  75
  80
  85
  90
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -14
  -15
New CAPEX, $m
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
Cash from investing activities, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -6
  -6
  -6
  -7
  -7
  -9
  -9
  -10
  -10
  -11
  -11
  -13
  -13
  -14
  -15
  -15
  -17
  -18
  -19
  -20
  -21
  -22
Free cash flow, $m
  2
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  18
  20
  22
  24
  27
  29
  32
  35
  37
  40
  43
  46
  50
  53
  57
  60
  64
  68
Issuance/(repayment) of debt, $m
  2
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
Issuance/(repurchase) of shares, $m
  2
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
Total cash flow (excl. dividends), $m
  6
  7
  8
  10
  11
  12
  13
  14
  16
  18
  20
  23
  25
  27
  30
  33
  35
  38
  41
  44
  47
  51
  54
  58
  61
  65
  69
  73
  78
  82
Retained Cash Flow (-), $m
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
Prev. year cash balance distribution, $m
  27
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  28
  1
  1
  2
  2
  2
  2
  3
  4
  5
  6
  8
  9
  11
  12
  14
  16
  18
  20
  23
  25
  27
  30
  33
  35
  38
  41
  44
  47
  51
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  27
  1
  1
  1
  1
  1
  1
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  3
  3
  3
  3
  2
  2
  2
  1
  1
  1
  1
  1
  0
Current shareholders' claim on cash, %
  97.4
  95.3
  93.8
  92.7
  91.9
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5

Airgain, Inc. is a provider of embedded antenna technologies used to enable wireless networking across a range of home, enterprise and industrial devices. The Company's antennas are found in devices deployed in carrier, enterprise and residential wireless networks and systems, including set top boxes, access points, routers, gateways and digital televisions. It offers six product lines, including MaxBeam High Gain Embedded Antennas, Profile Embedded Antennas, Profile Contour Embedded Antennas, Ultra Embedded Antennas, OmniMax High Performance External Antennas and MaxBeam Carrier Class Antennas. The Company, through its design, integration and testing of embedded antenna technology, provides its technology to the residential wireless local area network, wireless fidelity and antenna market, and also supplies to carriers, original equipment manufacturers, original design manufacturers and system designers. The Company supplies its products in the United States, Europe, Canada and Asia.

FINANCIAL RATIOS  of  Airgain, Inc. (AIRG)

Valuation Ratios
P/E Ratio 33.7
Price to Sales 3.1
Price to Book 3
Price to Tangible Book
Price to Cash Flow 26.9
Price to Free Cash Flow 26.9
Growth Rates
Sales Growth Rate 53.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 45
Current Ratio 0
LT Debt to Equity 4.4%
Total Debt to Equity 6.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.3%
Ret/ On Assets - 3 Yr. Avg. 20.4%
Return On Total Capital 14%
Ret/ On T. Cap. - 3 Yr. Avg. 42.8%
Return On Equity 16.3%
Return On Equity - 3 Yr. Avg. 138.8%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 44.2%
Gross Margin - 3 Yr. Avg. 43.1%
EBITDA Margin 11.6%
EBITDA Margin - 3 Yr. Avg. 9%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 3.6%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 8.2%
Net Profit Margin 9.3%
Net Profit Margin - 3 Yr. Avg. 8.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AIRG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AIRG stock intrinsic value calculation we used $50 million for the last fiscal year's total revenue generated by Airgain, Inc.. The default revenue input number comes from 0001 income statement of Airgain, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AIRG stock valuation model: a) initial revenue growth rate of 26.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AIRG is calculated based on our internal credit rating of Airgain, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Airgain, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AIRG stock the variable cost ratio is equal to 92%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AIRG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Airgain, Inc..

Corporate tax rate of 27% is the nominal tax rate for Airgain, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AIRG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AIRG are equal to 8.4%.

Life of production assets of 7.4 years is the average useful life of capital assets used in Airgain, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AIRG is equal to 2.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $46.224979 million for Airgain, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 9.601 million for Airgain, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Airgain, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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